Ten years later …

Should you expect compensation if someone does you damage they should have foreseen? Of course. But what if it goes on for an unforeseeable length of time?

Builder Terry Williams got himself into difficulty when doing up a house in Gwent. He was working on a party wall. It went wrong. The upshot was damage to the next-door home of Mrs Anne Saunders. The wall needed to be taken down and rebuilt and the roof fortified.

All that was 10 years ago. Eight years of litigation followed. Mrs Saunders, handling the case in person, recently came to the Court of Appeal to complain that the lump of money awarded her by the first judge was not enough. The £24,572 was quite sufficient for the rebuilding work but the £1000 as damages for loss of the opportunity to let two bedrooms over all those years was not on. Incidentally, having got the money for rebuilding the party wall and roof, Mrs Saunders told the Court of Appeal that she had not the slightest intention of getting it done. She said she did not create the problem, so it wasn't her responsibility to fix it.

This story is about consequential loss. Mrs Saunders said two rooms in her semi-detached house could be let. Her complaint was that while the litigation rumbled on for eight years without anyone bothering to fix the wall, she lost rent. The judge at the first trial wouldn't give more than one year's compensation – £1000. His reason was a matter of what consequences were "foreseeable" in law. He said that it was "a wholly unforeseeable consequence that nobody would get the wall mended in eight years. What one would expect is that the wall would be mended within a reasonable period". So what is a reasonable period? Counsel for the builder said six months. The judge thought one year. As to the figure on what the loss of the rooms for a year would be worth, the judge said his figure was rough and ready, hence £1000.

The Court of Appeal approached the matter of what is the test for foreseeable and recoverable loss: "Foreseeable damage caused to an unforeseeable degree is recoverable in the courts," it decided.

So, when the builder damaged the wall he was taken to have foreseen in law that Mrs Saunders would suffer damage not only by way of potential repair of the wall but also by way of a diminution in the use of her premises while it remained in disrepair. So, the key question is how reasonable it was for the wall and roof to remain in need of attention. Here the test was whether Mrs Saunders, contrary to her protestations, did indeed have a duty to mitigate her own loss.

The court decided that Mrs Saunders had acted reasonably in waiting eight years for the damages to be repaired

The burden to prove that was on the builder, and the Court of Appeal was invited to order a retrial on this point.

It wouldn't do that because the amount of money at stake could not justify the expense. "Proportionality" is a watchword these days. All courts must make decisions proportionate to the issues involved. So the court decided to make its own estimate of damage. It decided that Mrs Saunders had acted reasonably in waiting eight years for the damages to be repaired. So, she could have eight years' compensation for loss of opportunity to rent – at £1000 per year. That figure sounds rather stingy. How was it reached? It comes out of a court, arbitrator or even an adjudicator doing the best it can once it has decided that liability for damages does arise. But the amount of damages is not a precise science. In Mrs Saunders' case it was thought that, although there was a prospect of letting, the prospect was not good.

One can't help pondering on a curiosity here.

Postscript

Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or email him on info@tonybingham.co.uk.

Tony BinghamTony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple